Last-minute delay in decision to split German and French electricity markets

A controversial recommendation on whether and how to split the German and French energy markets has been postponed.

ENTSO-E, the association of grid operators, confirmed to Euractiv that the position being discussed between Central European grid operators, which was originally expected to be published next Monday, is now “scheduled for spring 2025.”

For the time being, this delay avoids an expected conflict between the Central European countries, which are increasingly affected by the functioning of their neighbors’ electricity grids.

ENTSO-E stated that the last-minute delay was due to “a dialogue with the European Commission regarding the scope of the offer zone study.”

Network operators were originally tasked with writing the report in autumn 2022. It was supposed to be published in the third quarter of 2024 and then on January 27.

The delay in making the decision may reflect the political sensitivity of the issue.

France, with a highly centralized energy system, resists the idea of splitting its energy markets. In Germany, the electricity-hungry south, with few wind turbines, fears having to pay a premium for wind power from the north.

One region, one price

Electricity markets in Europe need to reflect the physical capacity of the grid to transport electricity. EU rules state that there should be a single price for electricity in geographical areas where electricity can flow freely.

In 2022, the EU energy regulator ACER found that this was not the case for France and Germany, and that electricity flows in Central Europe were disrupted as a result.

Unlike other EU countries, such as Sweden and Italy, where electricity prices vary by region according to the capacity of the grid, the bloc’s largest countries have a single electricity price.

This leads to large intra-country electricity flows that sometimes spill over into neighboring countries’ grids and cause blackouts. It is argued that smaller regional pricing zones, instead of larger national regions, would solve this problem.

The 16 grid operators from 12 EU countries, ranging from France to Poland and Slovenia, will make a recommendation on whether the French and German markets should be split. Afterward, the concerned EU countries would have to unanimously agree, with the European Commission making the final decision.